SIFMA's response to one of the recent SEC proposals on NRSROs (but not the two related to Rule 2a-7 and money market funds -- comments on these are due Sept. 5) says, "The Securities Industry and Financial Markets Association's (SIFMA) Credit Rating Agency Task Force, in a comment letter filed with the Securities and Exchange Commission (SEC) on parts one and two of the SEC's proposed rules for credit rating agencies, broadly supports the SEC's efforts to address the issues relating to credit ratings of structured finance products, as well as improve the ratings process in general. In the letter, the Task Force notes the need for greater disclosure and increased transparency of the credit ratings process, while at the same time suggesting modifications to the proposals which it believes will make them more effective."

"We support the goals outlined in the SEC's proposal of improving disclosure of ratings methodologies, addressing conflicts of interest, and improving the transparency of ratings performance," said Deborah Cunningham, chief investment officer at Federated Investors and co-chair of SIFMA's Credit Rating Agency Task Force. "We encourage the SEC to ensure its ratings proposals are as effective as possible in achieving these goals, and in helping to prevent the credit-rating related issues which contributed to market turmoil over the last year."

"Better disclosure of information and more transparent and clearer explanations of ratings and the ratings process, combined with more frequent scrutiny of each rating, will, taken together, help boost investor confidence," said Boyce Greer, president, fixed income and asset allocation division at Fidelity and co-chair of SIFMA's Credit Rating Agency Task Force. "Providing investors with improved understanding of the basis for and limitations of credit ratings will undoubtedly be beneficial to the global markets."

The SIFMA letter concludes, "We support the efforts by the SEC to promote investor confidence in credit ratings, increase accountability in the rating process, and reduce conflicts of interest in the ratings process. The recent market turmoil has revealed a crisis in investor confidence in NRSRO ratings of structured securities. The lack of transparency concerning information made available to NRSROs, rating methodologies, the inputs and assumptions underlying such methodologies, the level of examination of underlying data, and the ongoing surveillance process hinders investors in their ability to utilize credit ratings as part of an independent, comprehensive approach to risk assessment. Similarly, the lack of easily accessible, comparable performance information prevents users of credit ratings from evaluating the rating performance of different NRSROs. Accordingly, the Task Force believes that the proposed requirements for increased disclosure under Rule 17g-2 and Form NRSRO discussed above are an appropriate step in light of the overall goal of increased transparency and will both allow investors to rely on NRSRO ratings with a fuller understanding of the bases and limitations of such ratings and encourage NRSROs to improve their rating processes. In order to make additional strides toward these goals, however, we hope that the SEC will take steps to further enhance and revise these proposed amendments along the lines we recommend in this letter."

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